Today I read a stock blog which noted that Gramercy Capital was being extensively shorted. The blogger did not explain why.

Gramercy invests in second and third mortgages on commercial property, in mezzanine loans secured by membership interests in LLCs and partnership interests in limited partnerships, and in real properties leased by banks. Not a wonderful investment strategy this quarter.

The interesting connection between Gramercy Capital and Lehman is found in three troubled SunCal projects where Lehman Commercial Paper is first lienholder, and a Gramercy fund holds the second and third mortgages which are now largely worthless.

From the "rural press" come very telling facts about the economic well being of big institutions. Remember that Gramercy Capital is heavily invested in ownership of bank branch buildings "rented" to credit tenant banks. Things aren't so peachy in that market right now.

From dailypress.com

"Hampton Bank Building to be Auctioned Off

September 24, 2008 - As part of an auction of 74 bank branches on the East Coast, a vacant building in Hampton will be sold off.

The Carlton Group is selling the properties on behalf of Gramercy Capital, a New York-based real estate investment firm. The building was once occupied by Southtrust Bank, which was bought by Wachovia in 2004, and is near Interstate 64 at the corner of Executive Drive and Marcella Road.

The site was built in 1989, has three drive-through teller lanes and 3,500 square feet on 0.85 acres of land. Carlton is taking sealed bids for the bank buildings.

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